There’s Just No Accounting for Lost Assets

Janice Johnson felt like she won the lottery when notified recently that she had unclaimed insurance proceeds being held by the state of Maryland.

Sure, it was only $283. But for the unemployed Laurel, Md., woman, the unexpected windfall meant some help in paying bills and a chance to splurge on a new outfit for her 11-year-old daughter.

“It was nice; it was a bonus,” said Johnson, 41, who reclaimed her money over the summer. “Funny thing, I didn’t believe it at first.”

Then Johnson remembered she did take out a since-lapsed life insurance policy while living in Ohio several years ago, although she’s uncertain as to why any money was owed to her or how Maryland came to possess it.

Millions of people like Johnson lose track of assets over the years. Sometimes it’s due to faulty record-keeping by a company. But more often it’s because people simply forget about accounts or investments or move without leaving forwarding addresses--or their forwarding addresses expire. Individuals sometimes die without providing information about an asset to their heirs.

Property is deemed abandoned--and in most cases turned over to the state in which the owner was last known to have resided--when a company is unable to reach the individual for a certain period, anywhere from two to seven years. (The limit is usually extended to 15 years on traveler’s checks.)

A company’s only responsibility is to send a letter to the last known address, although some do go the extra mile to find owners, believing it’s good customer relations. For instance, First Chicago, one of the nation’s largest stock transfer agents, pays an electronic search firm to update addresses on lost shareholders.

State officials say the unclaimed property they get often comes in small increments--on average under $1,000 per individual. But that can add up year after year.

Conservatively, about $35 billion in unclaimed property is believed to have been relegated to lost and found departments in state treasuries or revenue offices nationwide, some dating back to the last century. However, David W. Folsom, author of “Assets Unknown,” a consumer guide to tracking down misplaced assets, says the total amount could be as high as $350 billion, when taking into account property held by federal agencies or even foreign governments.

This includes dormant savings and checking accounts, forgotten stocks and bonds, dividend checks, uncashed payroll checks, insurance proceeds, unused gift certificates, utility refunds, even contents of safe deposit boxes.

“This has just been a very well-kept secret,” said Kim Usiak, president of Knowledge in Motion, a finder firm and information service in Coral Gables, Fla. “It’s hard to say how [the unclaimed assets] fell through the cracks.”

Usiak says states may not be trying very hard to find the rightful owners. “The states can use this money. . . . They can definitely benefit,” he said.

To be sure, turned-over assets amount to a bonanza for many cash-strapped states. While owners retain legal rights forever to unclaimed property, states can keep and use any interest derived from the asset until it is claimed.

On average, the states return less than one-fourth of all unclaimed property to owners, although efforts are underway to improve that rate. State officials discussed establishing a nationwide data bank at the National Assn. of Unclaimed Property Administrators’ recent annual convention in Maine. Eight states--Connecticut, Florida, Indiana, Louisiana, Massachusetts, Rhode Island, Wisconsin and Wyoming--have World Wide Web sites on the Internet that list the names of lost owners and their last-known addresses.

What happens to unclaimed property depends on state laws and policies.

Maryland, for example, routinely liquidates abandoned stocks and bonds about six months after receipt.

“It’s too much paperwork. We didn’t want to become a stock broker,” said Marvin Bond, assistant state comptroller.

Georgia holds on to all the securities it receives and even has someone to keep track of dividend checks, said Cheri McGiboney, administrator of the unclaimed property section of the Georgia Department of Revenue.

But like Maryland and many other states, Georgia holds regular auctions of safe deposit box contents. In one held in June, 515 boxes of jewelry, coins, baby pictures and other assorted bric-a-brac were sold to the public, netting $79,537, McGiboney said.

“The states would like to see that everything is returned to the owners, but there’s a cost in operating these programs,” said Karen Anderson, administrative coordinator for the National Assn. of Unclaimed Property Administrators in Indianapolis. “A lot of this is very small amounts of money. It’s not worth it for states to spend a lot trying to find someone who has 50 cents or $5 owed to them.”

Some individuals feel that way too.

Joseph Kovatch, who owns several car dealerships in Pennsylvania, more than contained his excitement when he recently spotted his name in a local newspaper ad listing owners of abandoned property. His loot: reportedly less than $20 from an uncashed check.

“I just turned it over to our attorneys,” he said.

States have devised several ways to notify owners. Most are required by law to take out newspapers ads at least once a year listing names of individuals. Others periodically set up booths at shopping malls or county fairs.

Proper identification like a bank passbook, Social Security card or driver’s license is required to make a claim.

Tracing or finders firms sometimes get involved by obtaining lists of people, either from the states or companies. However, they can charge up to 50% of an asset’s value. The industry average is 33%.

Anderson says individuals can avoid steep fees by doing some legwork on their own to obtain free public information.

“It’s a matter of getting ahold of the right office and filling out the proper forms and proving you are who you are,” she said.

Johnson said it only took her a few weeks to get her insurance proceeds from Maryland, which tracked her down and notified her by letter. She eagerly worked directly with the state.

Not everyone is thrilled by the prospect of an unexpected windfall.

Usiak, of Knowledge in Motion, tried to persuade a 72-year-old man, whom he refused to identify, to claim $628,000 from an insurance policy from a deceased relative. But the man refused.

“He said it would make life too complicated for him now,” Usiak said.